Duking it out

Various governors are duking it out with unions these days. Over pension and benefits packages for state workers. Mayors face the same problems with city workers. School boards face these problems with teachers. The same problems the auto companies face with their unions.

In all cases, the politicians and CEOs who preceded them promised too many benefits. †Benefits their generation did not have to pay for. Benefits future generations would have to pay for.† And the trouble today is that the future generations is us. And we cannot afford to pay the benefits those birds promised. And they are long gone, flown the coop.

This is the same problem the Greeks have. And the workers riot in the streets because government now has to cut their benefits.

All of this was avoidable. All such problems in the future are avoidable. All that was and is required is something called responsibility. We should require all workers to take responsibility for their own benefits. And we could do it easily.

First, we require that everyone buy their own pension plan. And their own health insurance. Then we require that all pension and health insurance plans have certain features. If you want to add bells and whistles to your plan, fine. You do so and you pay for it. Otherwise, you get a meat and potatoes plan.† The meat and potatoes required by law.



We take the money for these from your pay. When you change jobs you take your plans with you. When you are out of work we take the payments for your plans from your unemployment.

Unreasonable? Hey, we require everybody who drives a car to buy accident insurance, donít we? Each state says what your auto insurance must cover. If you want extra you pay for it. We donít require that payments come from your pay. But we could.

Suppose a union said the employer must buy the auto insurance for all the cars of all the workers.† Most of us would call that stupid. Yet we think it is natural for unions to demand this benefit from employers now.

Suppose in your next job interview you ask if the company pays for fire insurance on your house. Let me know how that works for you. It wonít work because our tradition is for people to buy their own fire insurance. To be responsible for their own.

It would not take much legislation to make everyone responsible for their pensions and healthcare coverage. And it would not take armies of bureaucrats to administer this.

Of course we already require workers to contribute to plans that cover some pension, disabilities and healthcare. These are called Social Security and Medicare. Unfortunately, we do not ask workers to take responsibility for them.

We could. We could have all workers own their own Social Security accounts. We could let them choose from a short list of approved investments. None of which would be high risk. We could let workers decide how much to draw in retirement. But not allow them to blow the money. Chile does all of this and is extremely successful.

If we had given such responsibilities to workers we would have zero problems with funding Medicare and Social Security today. Instead of the monstrous headaches we have.

If we had given such responsibilities to workers we would have zero benefits problems with police and civil servants and various union workers.

Our problems arise because we did not and do not give such responsibility to workers. If we did, workers would have to face reality. That is what taking responsibility entails: reality.

The reality should be that if you want certain amounts of pension you have to put in certain amounts of money. The reality should be that benefits have costs. If you are going to collect them, you should damned well pay for them. Instead of your employer. Instead of taxpayers. Instead of your grandchildren. You. The person in the mirror.

If you tell me this cannot be done, I suggest you Google Chileís Social Security system. If they can do it, so can we. And I further suggest you remember we all are required to face the reality of our own car insurance. Of course we could do it for pensions and healthcare.

From Tom ... as in Morgan.††††††††††††††††††

For more columns and for Tomís radio shows and new TV shows (and to write to Tom): tomasinmorgan.com.

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